Government introduces curbs on council spending to stop multi-million pound property gambles
1 min read
Tougher guidelines for councils borrowing cheap loans to make multi-million pound bets on the commercial property market have been introduced by ministers.
Sajid Javid, the Communities Minister, introduced the guidelines after councils spent a combined £2.8bn on land and building last year.
One local authority spent £422m in 2017 alone with the tiny Spelthorne district council in Surrey investing £10,600 for every household.
Fears were sparked that low cost Treasury loans were being used to gamble on the property market by council officials, after an investigation by the Times revealed the long-term trend.
Guidance issued by Mr Javid forces councils to be more transparent about the investment risks they are taking on with public money.
However, he did not set limits on how much a council is allowed to spend.
It says: “Authorities must not borrow more than or in advance of their needs purely in order to profit from the investment of the extra sums borrowed.”
Mr Javid is not the only MP to notice the growing trend – the Public Accounts Committee chairwoman Meg Hillier warned the boom in council spending on land and property echoed the run-up to the Icelandic banking collapse of 2008.
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